The morphogen gradient theory has been a useful framework in guiding studies in developmental biology aimed at understanding how multiple cell identities can be specified by few molecules. Research demonstrating the existence of a gradient of BMP signaling activity and its importance in the specification of different cell fates across the developing Drosophila wing have proven that this system is an ideal one to study the molecular mechanisms regulating BMP signaling. Our previous research uncovered two important features of the BMP gradient system. First, we found that two BMP morphogens, Dpp and Gbb, contribute in distinctly different ways to the activity gradient. Second, Sax, one of two type I receptors mediating morphogen signals has a dual function of both promoting and inhibiting signaling. In this renewal application, we propose a research program to extend our first two new findings with regard to the different behaviors of the BMP signaling molecules, Gbb and Dpp and the novel behavior of the Sax receptor. BMPs have profound functions in development and homeostasis, from early embryonic axis specification to the induction of bone growth. Mutations in various components of the BMP signaling pathway are responsible for multiple diseases and syndromes, including juvenile polyposis, brachydactyly, FOP, HHT2, Loeys-Dietz syndrome and pancreatic carcinomas. Clearly, dysregulation of the BMP signaling pathway has serious ramifications on human health and development. Given their potent effects on cellular physiology, BMP ligands have long been a desired therapeutic agent but with varied success as such. In order to ensure success as therapeutics or in disease intervention, the action of these powerful molecules must be understood in the context of the whole organism. The BMP pathway is highly conserved throughout the animal kingdom, at both the molecular and functional level. This allows us to make use of the Drosophila model system to more quickly investigate not only the factors but also the mechanisms responsible for regulating BMP signaling activity. We have the advantage of examining the interplay between different signaling components at their endogenous concentrations, in their normal location, not possible with such rigor in most other experimental systems. We have been able to identify new components and novel biochemical behaviors that impact BMP function and intend to investigate the mechanistic underpinnings of these new findings. Our results will be extrapolated into the human system and will provide valuable insight into our general understanding of BMP signaling, as well as into the intricacies of morphogen gradients as a fundamental mechanism by which different cells in many different organisms acquire their identity.